Bad Debts Written Off
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Quick question, if people can help that's kewl. Might sounds stupid though!!!
debit bad debt expense account
credit sales ledger control account
That's the double entry for that
and then credit the individual debtor account to bad debts written off, and I presume (this is where I am stuck) that you debit the bad debt written off account. But is this as an expense on the P and L? I don't think so because you already have bad debt expense account. So is it as a liability on the balance sheet. Really confused!!!! Please help!
Ta
debit bad debt expense account
credit sales ledger control account
That's the double entry for that
and then credit the individual debtor account to bad debts written off, and I presume (this is where I am stuck) that you debit the bad debt written off account. But is this as an expense on the P and L? I don't think so because you already have bad debt expense account. So is it as a liability on the balance sheet. Really confused!!!! Please help!
Ta
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Comments
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Re:Bad Debts Written Off
OK< your first suggestion is correct - debit the bade debt to the bad debts account and credit the SLCA. That is the whole of the double entry. There will be an account for the individual debtor (and you will need to credit that) and this is in the subsidiary ledgers. As it is outside of the general ledger and therefore outside of the double entry book-keeping system, no additional debit is required.
Does that explain it?0 -
Re:Bad Debts Written Off
Thank you very much for this!
Zo0 -
Re:Bad Debts Written Off
Mysteryukc I'm confused too!
I have an example in FTC's unit 5 book which says:
"It was agreed to write off the bad debt shown in the trial balance"
so I though double entry DR Bad debt CR SLCA
instead in the solution is:
DR Profit and Loss
CR Bad Debt
Can somebody explain me why?
Thanks! :P
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Re:Bad Debts Written Off
Hi Manuelissima.
You are correct in what you think the entries should be for each bad debt you write off.
Then, at the end of the accounting period you will have a debit entry in your P&L, as bad debt is an expense. You will also have a credit entry in your accumulated or bad debt provision as bad debt reduces the value of your asset i.e debtors.
Scott.0